Spinning Out of Control

January 27, 2012 - Dave Hecei

It happened summer of last year. Starting at the end of July, Thailand's monsoon season started and they had the worst flooding in decades. Unknown to most, Thailand seems to be where the majority of computer hard drives are manufactured. Thailand’s monsoon season was devastating in the tragic number of lost lives. Property losses in key industries will also be felt for longer than originally believed. The hard drive industry will likely take a year or more to recover.

If you have been looking to get a new hard drive, either as an upgrade, backup, or repair part, you may have found that the price and availability of drives have changed dramatically. Just a year ago, hard drives were cheap and plentiful. But that has all changed due to the flooding in Thailand.

A year ago today, you could buy a new name brand OEM 1 TB (terabyte) SATA drive for $60. You could also buy 40 or them, if you wanted to. The end of 2011, the same 1 TB drive cost almost $150. Across the board, most new drives (of most any capacity) almost tripled in cost. The other problem was that retailers, online or physical store, have placed limits on the number of drives you could purchase at one time. Some drives were limited to one per customer. This is still in place today, but it is finally starting to recede. The flooding ended months ago, but the impact will likely be felt even into next year.

Hard drive production is back in place in the over 100 factories in Thailand. The online price for a single 1 TB drive is down to almost $100. The big worry is what this will do to desktop and laptop prices over the next year. PC makers like HP, Dell, Acer, and Apple buy drives by the boxcar. If their supply is strained and prices have increased, will computer prices start to increase this year? So far it doesn’t look like this has happened.

Apple is in an interesting position. They have started abandoning spinning hard drives for SSD – Solid State Drives. While these drives have less storage capacity, the speeds of SSDs have helped sell their MacBook Air line of laptops. With a new 15-inch model (not yet officially announced by Apple) rumored to be in the work, Apple doesn’t have to worry as much about lack of or pricing of spinning hard drives. HP, Dell, and other Windows PC makers live on such razor thin margins, the effect of the Thailand floods on the hard drive industry is hard to predict.